Failure to deliver cars in two months: Govt decides to penalise automakers

ISLAMABAD: The government has decided to penalise auto manufacturers, in case of failing to deliver vehicles to the consumers, within two months, after booking orders as per new auto policy.

This was stated by the additional secretary, Ministry of Industries and Production, while briefing the National Assembly Standing Committee on Industries and Production, which held it meeting under the chairmanship of Sajid Hussain Turi Monday,.

The officials of the Ministry of Industries and Production further said that the decision will be finalised in the upcoming budget with the new clause to be applicable from July 2021.

The meeting was also informed by the Engineering Development Board (EDB) officials that as per the policy, it has been decided to impose a fine of three percent plus Kibor on car companies delaying deliveries.

The rate will be charged on the amount the buyer has paid.

It is to resolve "own-money" problem.

The General Manager (GM), EDB briefed the Committee about the new entries in automobile sector and their performance.

The Committee expressed its concerns about the extra money charged by the dealers and the issues being faced to the general public due to delay of delivery by the Morris & Garage (MG) Company.

The Committee, unanimously, decided that the Federal Board of Revenue (FBR) may be invited in the next meeting of the Committee.

The Committee deferred the remaining agenda due to paucity of time.

The Committee members said that at present, the "Own money" on different cars in ranging between Rs400,000 to Rs1,000,000, saying that the car dealers and investors are involved in this practice and they overcharge a car consumers wanting to get a car immediately.

It is above a car's actual price. It is a common practice in Pakistan's car industry, where car assemblers sometimes take months to deliver an order.

A buyer has to make a partial payment to book a car that is delivered as late as six months sometimes the authorities concerned must resolve this serious issue.

Talking about the commercial imports of the MG cars in the country, the members of the committee raised serious questions, saying that the importer has an agreement with the government to install MG car production plant in the country but as yet nothing has been done on the ground.

They said that hundreds of MG cars were imported but without ensuring supply of spare parts.

Member Committee Riazul Haq said that the MG cars, reportedly, were imported under invoicing and the matter should be probed by the Competition Commission of Pakistan.

The ED officials, responding to the questions, said that in a bid to provide cheap vehicles to the consumers, the government has allowed a number of global players to install their plants.

They further said that to keep environment clean, the government has also introduced electric vehicles and hybrid vehicles policies, under which by 2030, around 30 percent of the vehicles will be converted to environment-friendly fuels.

The standing committee member, Hamid Atiq Sarwar, said that no car dealer should be allowed to book a car order to sell on own money. The car company must keep checks and balances as bookings will be done through them, he added.

The Director General (DG), Privatisation Commission (PC) briefed the Committee about the salient features of the privatization of the Pakistan Steel Mills (PSM) and its retrenchment plan including remuneration package policy.

The joint secretary Ministry of Industries and Production informed that the pensions to the retired employees of the PSM have already been paid by the government.

He said that by the end of June, the government will issue expression of interest advertisement for the investors to submit their proposals for the revival of the PSM.

The DG PC informed that the Cabinet Committee on Privatization (CCOP), in its meeting held on June 17, 2019, directed the PC to immediately advertise the recruitment of a transaction advisor for the Pakistan Steel Mills Committee (PSMC) to bring in a party for the revival of the entity without transfer of full ownership.

The Board of the PC approved to initiate the process of hiring of Financial Adviser (FA) for the PSMC.

The Committee members have expressed their grave concerns on the delay in the process for hiring of the financial adviser and the hurdles in the privatisation of PSMC from 2006-2021.

The DG PC informed that 1,228 acre of land have been decided to allocate lease basis to the new subsidiary but not clarified about the balance land detail and settlement of payable liabilities.

The chairman of the Committee expressed his concern regarding the valuation of the said land.

He was of the view that fresh land valuation should be done by the government on market price.

The Committee also discussed that the Government of Sindh may also be taken on board before finalising the bid process in this respect, to avoid any further delay regarding the revival of the PSM.

After detailed discussion, the Committee decided that all stakeholders of the PSM will be invited in the next meeting of the committee.

The Committee further directed the secretary, Ministry of Industries and Production to address the problems being faced to the security of the PSM; the secretary, immediately directed the chief security officers of the PSM to send letter to the Home Secretary, Government of Sindh and Inspector General of Police Sindh.

The officials further said that an estimated $500 million is required for the rehabilitation of the PSM, which also include replacing the dated machinery.

They said that the PSM has to pay Rs260 billion liabilities to various entities including Sui Southern Gas Company (SSGC), Water Board, and the federal government.

The officials said that local coal produced in Balochistan can be used in the PSM and once the mill is revived it can produce three million tons of steel.

Copyright Business Recorder, 2021